Author Archives: hksar gov

     Following is a question by the Hon Jeremy Tam and a written reply by the Secretary for Food and Health, Professor Sophia Chan, in the Legislative Council today (April 17):   Question:        To… read more

     The Environmental Protection Department today (April 17) released a list of completed and newly commenced statutory environmental impact assessments (EIAs) and non-statutory environmental studies for major development projects betwe… read more

     Following is the speech by the Chief Executive, Mrs Carrie Lam, at the International Dispute Resolution Conference 2019 today (April 17):
 
Commissioner Xie (Commissioner of the Ministry of Foreign Affairs of the People’s Republic of China in the Hong Kong Special Administrative Region, Mr Xie Feng), Deputy Director General Ye (Deputy Director General of Department of Treaty and Law of the Ministry of Commerce Mr Ye Jun), Dr Law (President of the Hong Kong Mediation Centre, Dr Francis Law), the Honourable Mr Justice Poon (Justice of Appeal of the Court of Appeal of the High Court, Mr Justice Jeremy Poon), ladies and gentlemen,
 
     Good morning. On behalf of the Hong Kong Special Administrative Region Government, I’m pleased to welcome you to today’s International Dispute Resolution Conference, jointly organised by the United Nations Commission on International Trade Law, the Hong Kong Mediation Centre and the International Dispute Resolution and Risk Management Institute. Given our status as a leading international dispute resolution centre in Asia Pacific, I believe that Hong Kong is indeed the ideal location for this event, which brings together 500 professionals from various sectors to exchange ideas on the settlement of disputes.
 
     The theme of today’s conference is “New Era of Global Collaboration”. It is a timely theme, for we need global collaboration more than ever to tackle the daunting challenges faced by the world. Uneven growth, diverging trade policies, financial instability and trade and investment disputes are rife worldwide. Indeed, the United Nations 2019 World Economic Situation and Prospects report notes that last year saw an upswing in trade tensions and a steep escalation in the number of disputes raised under the dispute settlement mechanism of the World Trade Organization. Beyond the more visible trade disputes, climate change and biodiversity challenges all call for global solutions.
 
     An increase in international trade and investment disputes seems to be inevitable given the growth in cross-border economic activities and transactions, especially in Asia. Buoyed by domestic demand, Asia’s GDP is expected to grow 6.1 per cent a year on average between now and 2023. Hong Kong is taking full advantage of that growth. Nine of our top 10 trading partners are from Asia, and they accounted for almost 80 per cent of our merchandise trade in 2017. Given the Free Trade Agreement and related Investment Agreement between Hong Kong and the ASEAN, which were signed in 2017 and are expected to come into force later this year after the necessary ratification process, trade and investment in this region are bound to flourish in the years and decades to come.
 
     Hong Kong, as a founding member of the World Trade Organization and a staunch supporter of free trade, would no doubt welcome trade growth. The key is to manage and settle the increasing number of disputes that come with it. In this regard, conventional litigation alone will not prove sufficient. Arbitration, given its established international conventions, rules and norms, has long been used to settle international disputes. And mediation is gradually sharing arbitration’s spotlight in international dispute resolution. Mediation’s attractions are many. It works to achieve an amicable resolution, given that settlements must be reached voluntarily. And that, of course, is conducive to maintaining business relationships among the parties involved.
 
     That said, the lack of an effective method for enforcing mediated agreements has been an impediment to its international development. In that regard, I am pleased to note the approval, last year, of the Convention on International Settlement Agreements Resulting from Mediation and its subsequent adoption by the United Nations General Assembly. The Mediation Convention, with its enhanced enforceability, is expected to boost mediation, particularly investment mediation, as a global means of dispute resolution.
 
     Hong Kong is actively preparing for that reality, providing dedicated training for investment mediators. The first Investment Law and Investor-State Mediator Training in Asia took place here last October. More than 50 dispute resolution practitioners and government officials from Asia and beyond took part.
 
     As an international legal and dispute resolution services centre in the Asia Pacific region, Hong Kong will continue to follow closely the development on international mediation and arbitration, while embracing the immense opportunities that may emerge. Thanks to our “one country, two systems” framework, Hong Kong maintains our common law system, underpinned by an independent judiciary and a deep and varied pool of legal practitioners from all over the world. Hong Kong’s judicial independence is recognised internationally and is ranked eighth among 140 economies. According to World Bank’s World Governance Indicators, Hong Kong’s percentile ranking in the rule of law has improved from 70 per cent in 1996 to 94 per cent in 2017, showing that the rule of law in Hong Kong has continued to improve over the years. Let me add that 14 eminent judges from other common law jurisdictions, including Australia, Canada and the United Kingdom, currently sit on our Court of Final Appeal as non-permanent judges, which in itself is a testimony to our rule of law and independent judiciary.
 
     Our economic system is no less attractive. We maintain a free-market economy, offering a simple and low tax regime and a level playing field for companies. The Heritage Foundation has named Hong Kong the world’s freest economy for the past 25 years in a row. The Fraser Institute also ranks us consistently the first in economic freedom.
 
     Those are our traditional strengths, and we are also developing new ones. In particular, innovation and technology is a policy priority of my Government, and Hong Kong is catching up quickly on that front. We are encouraging the application of technology in almost every aspect of our economy and society, including justice for cross-border disputes. A representative from our Department of Justice is chairing a Working Group in the Asia-Pacific Economic Cooperation (APEC), which has developed a framework for the online resolution of cross-border, business-to-business disputes. It will cut costs and overcome the geographical distance between parties involved. It will also promote the use of dispute-resolution services internationally.
 
     To support APEC’s work, non-governmental organisations here are creating an electronic Business Related Arbitration and Mediation system, or eBRAM in short. eBRAM is being developed as a secure and cost-effective deal-making and dispute-resolution online service for cross-border commercial and trade disputes, including those relating to projects under the Belt and Road Initiative. My Government is providing close to US$20 million to support eBRAM’s development and initial operation. We hope that eBRAM could facilitate business operation and achieve better access to justice by providing easily accessible and affordable dispute resolution services. We also hope that it could demonstrate Hong Kong’s unique competitiveness under the “one country, two systems” principle in addressing the service need of various jurisdictions with different legal traditions.
 
     In short, ladies and gentlemen, Hong Kong is determined, and my Government is committed, to Hong Kong’s continuing rise as centre for international legal and dispute-resolution services. We look forward to your support.
 
     Before I close, my thanks to the United Nations Commission on International Trade Law, the Hong Kong Mediation Centre and the International Dispute Resolution and Risk Management Institute for organising this important conference. I wish each and every one of you a rewarding day at the conference and here in Hong Kong, Asia’s world city. Thank you very much.

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     Following is a question by the Hon Kenneth Leung and a written reply by the Secretary for Financial Services and the Treasury, Mr James Lau, in the Legislative Council today (April 17):
 
Question:
 
     According to the Money Lenders Ordinance (Cap 163), no person shall carry on business as a money lender without a licence, except the persons specified in Part 1 of Schedule 1 (e.g. a bank) and the persons who make a loan as specified in Part 2 of Schedule 1. On regulating money lenders, will the Government inform this Council:
 
(1) of the number of licensed money lenders in each of the past five years, with a breakdown by type of business (e.g. vehicle financing and corporate/business lending); if such a breakdown is not available, of the reasons for that;
 
(2) as it is stipulated in section 24 of Cap. 163 that no person shall lend money at an effective rate of interest which exceeds 60 per cent per annum, whether the Government has studied if there is any room for adjusting downward the interest rate ceiling; if it has studied and the outcome is in the affirmative, of the details; if the study outcome is in the negative, the reasons for that;
 
(3) whether it will set up an independent institution to regulate money lenders and regulate money lenders on an ongoing basis under a risk-based approach; if so, of the details; if not, the reasons for that; and
 
(4) whether it will tighten the licensing conditions for money lenders to require that money lenders must, before approving a personal loan, conduct a test on the repayment ability of the loan applicant, so as to reduce the risk of over-borrowing on the part of the borrower; if so, of the details; if not, the reasons for that?
 
Reply:
 
President,
 
     A consolidated reply to the question raised by the Hon Kenneth Leung is as follows:
 
(1) The number of licensed money lenders in each of the past five years is set out below:
 

As at	Number of licensed money lenders
December 31, 2018	2 153
December 31, 2017	1 994
December 31, 2016	1 848
December 31, 2015	1 605
December 31, 2014	1 309

     Since the money lender licences granted by the Licensing Court do not restrict the types of money lending business to be conducted by the licensees, the Money Lenders Unit (MLU) of the Companies Registry does not have the relevant breakdown.
 
(2) and (3) Currently, the Licensing Court, the Police and the MLU have respective roles to play under the regulatory regime for money lenders. The Licensing Court is responsible for the determination of applications for and granting of money lender licences as well as the imposition of licensing conditions. The Police is responsible for enforcing the Money Lenders Ordinance (MLO), including examination of applications for money lender licences and renewal of licences, and investigating complaints against money lenders. As for the MLU, it is responsible for processing applications for money lender licences, maintaining a register of money lenders for public inspection, as well as adopting risk-based supervisory measures to monitor licensed money lenders’ compliance with the MLO and the conditions imposed by the Licensing Court when carrying on their money lending business. The MLU also conducts site inspections to ensure licensed money lenders have appropriate systems and measures in place for their business operation.
 
     Section 24 of the MLO provides that if any person lends at an effective rate of interest exceeding 60 per cent per annum, he shall commit an offence punishable on conviction by a fine and/or imprisonment, and the relevant loan agreement shall also be unenforceable. Section 25 of the MLO provides that where proceedings are taken in any court by any person for the recovery of any money lent, or on application by a debtor, the court may, if satisfied that the loan transaction is extortionate, reopen the transaction and substitute just terms. A transaction where the effective rate of interest exceeds 48 per cent per annum is presumed prima facie to be extortionate.
 
     The regulatory regime for money lenders and the statutory provisions pertaining to money lending transactions have been operating smoothly and are effective in curbing loansharking activities in Hong Kong. The Government will continue to keep in view the operation of the regulatory regime.
 
(4) Money lenders, which are outside the banking system, provide an alternative source of finance for individuals and enterprises which need to borrow money. Money lenders will conduct risk assessments on the repayment ability of borrowers in deciding whether to approve the loan applications and the relevant terms and conditions. To alert the public of the risk of over-borrowing, more stringent licensing conditions have been imposed on all money lenders since 2016. Licensed money lenders are required to include a warning statement in their advertisements, namely, “Warning: You have to repay your loans. Don’t pay any intermediaries”. The Government has also rolled out public education and publicity activities, including collaborations with the Investor and Financial Education Council and the Consumer Council to remind the public of issues requiring attention when borrowing and to promote the message of prudent borrowing. read more

     Following is a question by Hon Paul Tse and a written reply by the Secretary for Financial Services and the Treasury, Mr James Lau, in the Legislative Council today (April 17)
 
Question:
 
     By offering tax concessions as an incentive, the Government implements the Mandatory Provident Fund (MPF) voluntary contribution regime. Yet, there are comments that the regime has much room for improvement. On enabling members of the public to effectively achieve tax savings and enhancing the attractiveness of the regime to members of the public, will the Government inform this Council:
 
(1) whether it will set up a department dedicated to providing services for MPF contributors (contributors), which will offer only exchange traded funds (e.g. index funds such as the Tracker Fund of Hong Kong (TraHK) and Hang Seng FTSE China 50 Index ETF) plus money market funds as investment options to contributors, so as to provide contributors with an MPF investment option which is relatively safe and charges low management fees; if so, of the details; if not, the reasons for that; and
 
(2) whether it will allow, subject to a tax deduction cap of $60,000, contributors to purchase by themselves from stock markets, without involving their MPF trustees, index funds (such as TraHK) which charge low management fees, and then inject such funds into their MPF schemes’ accounts, so as to ameliorate the situation of management fees persistently nibbling away at contributions and to increase the incentive for making voluntary contributions?
 
Reply:
 
President,
 
(1) The Government considers that, instead of being managed by a Government department, the Mandatory Provident Fund (MPF) System should be managed and operated privately by the market.
 
     We agree that scheme members should be offered investment options which are relatively safe and charge low management fees. As of February 2019, 29 MPF Constituent Funds (CF) are passively managed index-tracking funds (12 of which invest in the Tracker Fund of Hong Kong). The Fund Expense Ratios (FERs) of these CFs range between 0.71 per cent and 1.30 per cent.
 
     In addition, the objective of the Default Investment Strategy (DIS) is precisely to offer an investment option which is relatively safe and charges low management fees. The DIS is subject to fee control which consists of two caps, namely a management fee cap of 0.75 per cent and a recurrent out-of-pocket expenses cap of 0.2 per cent. The Government has previously undertaken to review the fee cap levels within three years after the launch of the DIS, with a view to further lowering the fee caps. We expect to start discussions on the new fee caps next year.
 
     The Mandatory Provident Fund Schemes Authority (MPFA) will continue to proactively encourage MPF trustees to make available more investment options which are relatively safe and charge low management fees to scheme members.
 
(2) MPF is a scheme whereby trustees pool small amounts of monthly contributions from individual scheme members together for investment. As compared to the small amount of monthly investments by individuals, this pooled investment model achieves a higher level of cost efficiency.
 
     We understand Hon Tse’s good intention in enhancing the cost efficiency of the MPF system. However, under Hon Tse’s suggestion, scheme members may need to pay for a number of transaction fees to different financial institutions. They may also need to take up various administrative tasks on their own. This may go against the original intention of Hon Tse’s proposal.
 
     The MPFA has been requiring MPF trustees to regularly review the fee levels of their MPF products. Since the introduction of the FER in July 2007 and up to March 2019, the average FER of MPF funds has dropped from 2.06 per cent to 1.52 per cent. During this period, the DIS legislation was enacted in May 2016 and 138 MPF funds had reduced their fees. read more